Exhibit 10.17
Amcast Industrial Corporation (letterhead)
Appendix A
April 1, 2002
Joseph R. Grewe
625 Club Drive
Aurora, Ohio 44202
Dear Joe:
Amcast Industrial Corporation, an Ohio corporation (the Company),
considers the establishment and maintenance of a sound and vital management to
be essential to protecting and enhancing the best interests of the Company and
its shareholders. In this regard, the Company recognizes that, as is the case
with many publicly held corporations, the mere possibility of a change in
control may raise distracting and disrupting uncertainties and questions among
management personnel, may interfere with their whole-hearted attention and
devotion to the performance of their duties, and may even lead to their
departure, all to the detriment of the best interests of the Company and its
shareholders. Accordingly, the Board of Directors of the Company (the "Board")
has determined that the best interests of the Company and its shareholders would
be served by assuring to certain executives of the Company, including yourself,
the protection provided by an agreement which defines the respective rights and
obligations of the Company and the executive in the event of termination of
employment subsequent to a change in control of the Company.
In order to induce you to remain in the employ of the Company, this
letter agreement sets forth certain of the severance benefits which the Company
agrees will be provided to you in the event your employment with the Company
[or, in the case of a transaction described in clause (iv) of paragraph 2, with
the successor to the Company (a "Successor")] is terminated subsequent to a
change in control of the Company under the circumstances described below.
Except where the context otherwise indicates, the term Company
hereinafter includes the Company and any Successor.
1. OPERATION AND TERM OF AGREEMENT. This agreement, although effective
immediately, shall not become operative unless and until there has been a change
in control of the Company. None of the provisions of this agreement shall be
applicable to any termination of your employment, however occurring, which is
effective prior to a change in control of the Company. This agreement shall
continue until the later of December 31, 2004 or two years after the occurrence
of a change in control of the Company, provided such change in control occurs on
or before December 31, 2004, subject to extension beyond that date by mutual
written consent. The Company will review this agreement with you between January
1, 2003 and July 31, 2003, for the purpose of determining whether or not an
extension beyond December 31, 2004 is mutually agreeable and, if so, on what
basis and for how long.
Joseph R. Grewe
April 1, 2002
Page 2
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless
there shall have been a change in control of the Company, as set forth below,
and your employment with the Company shall thereafter have been terminated in
accordance with paragraph 3 below. For purposes of this agreement, a "change in
control" of the Company shall mean and be deemed to have occurred on (i) the
date upon which the Company is provided a copy of a Schedule 13D, filed pursuant
to Section 13(d) of the Securities Exchange Act of 1934 (the 1934 Act),
indicating that a group or person, as defined in Rule 13d-3 under the 1934 Act,
has become the beneficial owner of 20% or more of the outstanding Voting Shares
of the Company or the date upon which the Company first learns that a person or
group has become the beneficial owner of 20% or more of the outstanding Voting
Shares of the Company if a Schedule 13D is not filed; (ii) the date of a change
in the composition of the Board of Directors of the Company such that
individuals who were members of the Board of Directors on the date two years
prior to such change (or who were subsequently elected to fill a vacancy in the
Board, or were subsequently nominated for election by the Company's
shareholders, by the affirmative vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such two year
period) no longer constitute a majority of the Board of Directors of the
Company; (iii) the date the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the holders of the Voting Shares of the
Company outstanding immediately prior to the merger or consolidation continuing
to own immediately after the merger or consolidation 80% or more of the Voting
Shares of the Company or the surviving entity, if the Company is not the
surviving entity in the merger or consolidation; or (iv) the date shareholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
the Company's assets. "Voting Shares" means any securities of the Company that
vote generally in the election of directors.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
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(A) If any of the events described in paragraph 2 constituting a change
in control of the Company shall have occurred, then upon any subsequent
termination of your employment at any time within two years following the
occurrence of such event, you shall be entitled to the benefits provided by this
agreement, as set forth in paragraph 5, unless such termination is (i) by the
Company for Cause or because of your Disability, or (ii) because of your
Retirement, or (iii) by you other than for Good Reason, or (iv) because of your
death.
(B) As used in this agreement, the terms Cause, Retirement, Good
Reason, and Disability shall have the meanings set forth below:
(i) Cause. "Cause" shall mean (a) the willful and continued
failure by you to substantially perform your duties with the Company
(other than any such failure resulting from your physical or mental
illness or other physical or mental incapacity), after a demand for
substantial performance is delivered to you by the Board which
specifically identifies the manner in which the Board believes that you
have not substantially performed your duties, or (b) the willful
engaging by you in gross misconduct which is materially and
Joseph R. Grewe
April 1, 2002
Page 3
demonstrably injurious to the Company resulting or intended to result,
directly or indirectly, in substantial personal gain or substantial
personal enrichment at the expense of the Company. For purposes of this
subparagraph, no act, or failure to act, on your part shall be
considered willful unless done, or omitted to be done, by you not in
good faith and without reasonable belief that your action or omission
was in the best interests of the Company. Notwithstanding the
foregoing, Cause shall not be deemed to exist unless and until there
shall have been delivered to you a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the number of
directors then in office at a meeting of the Board called and held for
that purpose (after reasonable notice to you and an opportunity for
you, together with your counsel, to be heard before the Board), finding
that in the good faith opinion of the Board you were guilty of conduct
set forth above in clauses (a) or (b) of the first sentence of this
subparagraph and specifying the particulars thereof in detail.
(ii) Retirement. "Retirement" shall mean cessation of your
employment in accordance with the Company's retirement policy
(including early retirement) generally applicable to salaried
employees, or in accordance with any retirement arrangement with
respect to you established with your consent.
(iii) Good Reason. "Good Reason" shall mean:
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(a) The assignment to you of any duties inconsistent
with your position, duties, responsibilities and status with
the Company immediately prior to a change in control of the
Company, or a change in your responsibilities, as in effect
immediately prior to a change in control of the Company, which
materially diminishes your responsibilities with the Company
when considered as a whole, or any removal of you from or any
failure to re-elect you to any of such positions or offices;
provided, however, that the foregoing shall not constitute
Good Reason if done in connection with termination of your
employment because of your Retirement, or by the Company for
Cause or because of your Disability, or by you other than for
Good Reason.
(b) A reduction by the Company of your then current
annual base salary or, if higher, your annual base salary as
in effect at the time of the change in control of the Company.
(c) Failure by the Company to continue in effect any
benefit, incentive compensation, pension, employee stock
ownership, stock option, life insurance, medical, health and
accident, or disability plan in which you are participating at
the time of a change in control of the Company or plans
providing you with substantially similar benefits, or the
taking of any action by the Company which would adversely
affect your participation in or materially reduce your
benefits under any of such plans or deprive you of any
material fringe benefit enjoyed by you at the time of the
change in control of the Company, or the failure by the
Joseph R. Grewe
April 1, 2002
Page 4
Company to provide you with the number of paid vacation days
to which you would then be entitled in accordance with the
Company's vacation policy in effect at the time of the change
in control of the Company.
(d) The relocation of the Company's principal
executive offices to a location outside Montgomery County,
Ohio, if at the time of a change in control of the Company you
are based at the Company's principal executive offices.
(e) The Company's requiring you to be based anywhere
other than the location where you are based at the time of a
change in control of the Company, if the same requires you to
relocate your principal residence; or, in the event you
consent to being based anywhere other than such location, the
failure by the Company to pay (or reimburse you for) all
reasonable moving expenses incurred by you relating to a
change of your principal residence in connection with such
relocation and to indemnify you against any loss [defined as
the difference between the higher of (1) your aggregate
investment in such residence or (2) the fair market value of
such residence, as determined by a real estate appraiser
designated by you and reasonably satisfactory to the Company,
and the actual sale price of such residence after the
deduction of all real estate brokerage charges and related
selling expenses] realized upon the sale of such residence in
connection with any such change of residence.
(f) The Company's requiring you to perform duties or
services which necessitate absence overnight from your place
of residence, because of travel involving the business or
affairs of the Company, to a degree not substantially
consistent with the extent of such absence necessitated by
such travel during the period of twelve months immediately
preceding a change in control of the Company, except to the
extent that such travel or absence is in connection with the
finalization of the transaction resulting in the change of
control, and does not continue for more than 90 days after the
final closing of the transaction.
(g) The failure of the Company to obtain the
assumption of this agreement by any Successor as provided in
paragraph 7 hereof.
(h) The Company's termination of your employment
without satisfying any applicable requirements of paragraph 4
and subparagraph B (i) above.
(iv) Disability. "Disability" shall mean your inability to
perform the duties required of you on a full-time basis for a period of
six consecutive months because of physical or mental illness or other
physical or mental disability or incapacity, followed by the Company
giving you thirty days' written notice of its intention to terminate
your employment by reason thereof, and your failure because of physical
or mental illness or other physical or mental disability or incapacity
to resume the full-time performance of your duties within such period
of thirty days and thereafter perform the same for a period of two
consecutive months.
Joseph R. Grewe
April 1, 2002
Page 5
(C) During any period of time subsequent to a change in control of the
Company, if you fail to perform your duties as a result of physical or mental
illness or other physical or mental disability or incapacity, you shall continue
to receive your full salary at your annual base salary rate then in effect,
together with incentive compensation (as defined in paragraph 5(A) accrued but
not paid prior to your Date of Termination) as defined in paragraph 5 until you
return to work or your employment with the Company is terminated; provided,
however, that any amount otherwise payable for any period of time pursuant to
this subparagraph (C) shall be reduced by any payment or payments you receive
for such period of time under any employee salary continuation plan or employee
disability insurance plan maintained by the Company no part of the cost of which
was paid or is payable by you.
(D) If subsequent to a change in control of the Company your employment
is terminated by the Company for Cause, the Company shall pay you your full
salary through the Date of Termination at your annual base salary rate in effect
at the time Notice of Termination is given, and you shall also receive all
accrued or vested benefits of any kind to which you are, or would otherwise have
been, entitled through the Date of Termination (as defined in paragraph 4), and
the Company shall thereupon have no further obligation to you under this
agreement.
4. NOTICE AND DATE OF TERMINATION.
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(A) Any termination of your employment subsequent to a change in
control of the Company shall be consummated by written Notice of Termination
given to the other party. For purposes of this agreement, "Notice of
Termination" shall mean a notice that indicates the specific termination
provision or provisions in this agreement relied upon, if any, and sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment.
(B) "Date of Termination" shall mean (i) if your employment is
terminated by the Company for Cause, the date specified in the Notice of
Termination or the date on which the meeting of the Board referred to in
subparagraph 3(B)(i) is concluded, whichever date is the later; or (ii) if your
employment is terminated for any other reason, the date on which Notice of
Termination is given or the effective date specified in the Notice, whichever is
later. For purposes of this agreement, termination of your employment shall be
deemed to have occurred within two years following the occurrence of a change in
control of the Company if the Date of Termination is within such two-year
period.
Joseph R. Grewe
April 1, 2002
Page 6
5. COMPENSATION AND BENEFITS UPON TERMINATION.
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(A) "Incentive Compensation" shall mean the annual cash payment awarded
under the Annual Incentive Program ("AIP") or other plan which replaces the AIP
but not including any awards under any stock option, stock grant, stock rights,
or similar plan or any award under any company sponsored profit sharing,
pension, 401k, or similar savings plan.
(B) The compensation and benefits to be provided to you pursuant to
paragraph 3 of this agreement upon termination of your employment with the
Company under specified circumstances within two years following a change in
control of the Company include the following:
(i) Subject to the provisions of paragraph 8 hereof, the
Company shall pay to you as severance pay in a lump sum in cash on the
Date of Termination, the following amounts:
(a) Your full salary through the Date of Termination
at your annual base salary rate in effect at the time Notice
of Termination is given; and also the amount of Incentive
Compensation to any completed period or periods which has been
earned by or awarded to you but which has not yet been paid to
you.
(b) In lieu of any further salary payments to you for
periods subsequent to the Date of Termination, an amount (the
Additional Compensation Payment) equal to two hundred percent
(200%) of the sum of your annual base salary at the rate in
effect as of the Date of Termination (or, if higher, at the
rate in effect at the time of the change in control) plus an
amount equal to two hundred percent (200%) at the average
annual amount awarded to you as Incentive Compensation for the
two years immediately preceding the year during which the Date
of Termination occurs (whether or not fully paid).
(c) An amount in cash equal to the aggregate spread
between the exercise prices of all options granted to you by
the Company ("Options") which are then outstanding, whether or
not then fully exercisable, and the higher of (a) the Fair
Market Value of Common Share of the Company ("Company Shares")
on the Date of Termination or (b) the average price per
Company Share actually paid by the acquiring party in
connection with any change in control of the Company. As used
in this subparagraph, "Fair Market Value" shall mean (1) in
the event the Company Shares are listed on any exchange or in
the NASD National Market System, the last sale price on such
exchange or System on the Date of Termination (or last trading
date prior thereto) or, if there are no sales on such date,
the mean between the representative bid and asked prices for
Company Shares on such exchange or System at the close of
business on such date or (2) in the event that there is then
no public market for the Company Shares or that trading in the
Company Shares is sporadic and the mean between any bid and
asked prices is not representative of fair market value, the
fair market value of the Company Shares determined in
accordance with ss.2031-2(f) of the Treasury Regulations or
any successor provision thereto. Any Option for which payment
is made as prescribed in this subparagraph (c) shall be
canceled effective upon the making of such payment.
Joseph R. Grewe
April 1, 2002
Page 7
(d) All legal fees and expenses reasonably incurred
by you in good faith as a result of such termination
(including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by this
agreement).
(e) Interest at the rate of 10 percent per annum,
compounded daily from the due date of any payment required to
be made by the Company under any provision of the agreement
through the date such payment is actually made.
(ii)The Company shall, at its expense, maintain in full force
and effect for your continued benefit all life insurance, medical,
health, and accident plans, programs and arrangements in which you were
entitled to participate at the time of the change in control, provided
that your continued participation is possible under the terms of such
plans, programs and arrangements. In the event that the terms of any
such plan, program, or arrangement do not permit your continued
participation or that any such plan, program or arrangement has been or
is discontinued or the benefits thereunder have been or are materially
reduced, the Company shall arrange to provide, at its expense, benefits
to you which are substantially similar to those which you were entitled
to receive under such plan, program or arrangement at the time of the
change in control. The Company's obligation under this subparagraph
(ii) shall terminate on the earliest of the following dates: (a) the
second anniversary date of the Date of Termination, (b) the date an
essentially equivalent and no less favorable benefit is made available
to you by a subsequent employer or (c) the date that would have been
your normal retirement date under the Company's defined benefit pension
plan for salaried employees had you remained employed by the Company.
(iii)In the event that because of their relationship to you,
members of your family or other individuals are covered by any plan,
program, or arrangement described in subparagraph (ii) above
immediately prior to the Date of Termination, the provisions set forth
in subparagraph (ii) shall apply equally to require the continued
coverage of such persons; provided, however, that if under the terms of
any such plan, program or arrangement any such person would have ceased
to be eligible for coverage during the period in which the Company is
obligated to continue coverage for you, nothing set forth herein shall
obligate the Company to continue to provide coverage for such person
beyond the date such coverage would have ceased even if you had
remained an employee of the Company.
(iv)The Company shall enable you to purchase the automobile,
if any, which the Company was providing for your use at the time Notice
of Termination was given at the wholesale value as set out in the
latest Black Book published by National Auto Research Division of
Hearst Business Media Corporation, of such automobile at such time.
Joseph R. Grewe
April 1, 2002
Page 8
(C) If an event constituting Good Reason shall occur, you shall be
entitled to the compensation and benefits described in (A) above only if you
give a Notice of Termination with respect thereto within 90 days after the
occurrence of such event, regardless of whether there has been an intervening
termination of your employment by the Company or otherwise.
(D) You shall not be required to mitigate the amount of any payment
provided for in this agreement by seeking other employment or other- wise;
provided, however, that in the event that you shall obtain other employment at
any time within the two-year period immediately following your Date of
Termination, 20% of all earnings obtained by reason of such other employment
during the two-year period immediately following your Date of Termination shall
be payable to the Company in full satisfaction of any obligation you have to
mitigate payment made to you by the Company. Upon obtaining any such other
employment, you, within thirty (30) days thereof, shall notify the Company in
writing of such other employment and the aggregate compensation (including
Incentive Compensation, bonuses and all other forms of cash and contingent
remuneration) to which you will be entitled. During the two-year period
immediately following your Date of Termination, you shall provide the Company,
on or before April 15 of each year in such two-year period, a photostatic copy
of your federal income tax return (including all schedules and exhibits
thereto), as filed with the Internal Revenue Service for the preceding calendar
year.
6. RIGHTS AS FORMER EMPLOYEE. Nothing contained in this agreement shall
be construed as preventing you, and shall not prevent you, following any
termination of your employment whether pursuant to this agreement or otherwise,
from thereafter participating in any benefit or insurance plans, programs or
arrangements (including without limitation, any retirement plans or programs) in
the same manner and to the same extent that you would have been entitled to
participate as a former employee of the Company had this agreement not have been
executed, except, however, you shall not be entitled to any severance payments
under any severance pay programs of the Company (other than this agreement) if
you are paid the benefits provided for under this agreement.
7. SUCCESSORS. The Company shall require any Successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to you, to expressly assume and agree to perform
this agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of such succession
shall be a breach of this agreement and shall entitle you to compensation from
the Company in the same amount and on the same terms as you would be entitled
hereunder if you terminated your employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. This agreement shall
inure to the benefit of and be enforceable by your personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If you should die while any amounts would still be
payable to you hereunder if you had continued to live, all such amounts, unless
otherwise provided herein, shall be paid to such beneficiary or beneficiaries as
you shall have designated by written notice delivered to the Company prior to
your death or, failing such written notice, to your estate.
Joseph R. Grewe
April 1, 2002
Page 9
8. SAVINGS CLAUSE.
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(A) The Deficit Reduction Act of 1984 added Section 280G to the
Internal Revenue Code of 1954, as amended (the Code). Section 280G imposes a 20%
excise tax on excessive compensation received by, and denies a deduction to the
corporation for the amount of excess compensation paid to, employees who are
officers, shareholders, or highly compensated individuals as a result of a
change in the ownership or effective control of the corporation or in the
ownership of a substantial portion of the assets of the corporation. In general,
payments to an individual that are contingent on a change in control will not be
treated as excessive if such payments do not exceed three times the average
annual compensation received by such individual over the five calendar years
preceding the year in which the change in control occurred. The provisions in
subparagraph (B) of this paragraph 8 are designed to maximize the amounts
payable to you pursuant to this agreement or otherwise that are contingent upon
a change of control of the Company.
(B) In the event that it is determined that any payment by the Company
to or for your benefit (whether paid or payable pursuant to the terms of this
agreement or otherwise) would be subject to the 20% tax pursuant to Section 4999
of the Code, then the aggregate present value of amounts payable to or for your
benefit pursuant to this agreement (such payments pursuant to this agreement are
hereinafter referred to as "Agreement Payments") shall be reduced to the Reduced
Amount. For purposes of this subparagraph, the "Reduced Amount" shall be defined
as an amount expressed in present value that maximizes the aggregate present
value of Agreement Payments without causing any payments to be subject to the
20% tax pursuant to Section 4999 of the Code.
9. NOTICES. All notices required or permitted to be given under this
agreement shall be in writing and shall be mailed (postage prepaid by either
registered or certified mail) or delivered:
If to the Company, addressed to: Amcast Industrial Corporation
7887 Washington Village Drive
Dayton, Ohio 45459
Attention: Chief Executive Officer
and if to you, addressed to: Joseph R. Grewe
625 Club Drive
Aurora, Ohio 44202
Joseph R. Grewe
April 1, 2002
Page 10
Either party may change the address to which notices to such party are to be
directed by giving written notice of such change to the other party in the
manner specified in this paragraph. All notices, including without limitation,
any Notice of Termination, shall be deemed to have been given upon the date of
actual receipt of the recipient party.
10. ARBITRATION. Any dispute or controversy arising out of or relating
to this agreement shall be settled by arbitration in Dayton, Ohio, in accordance
with the rules then obtaining of the American Arbitration Association, and
judgment may be entered on the arbitrator's award in any court having
jurisdiction.
11. MISCELLANEOUS. No provision of this agreement may be modified,
waived, or discharged unless such waiver, modification or discharge is agreed to
in writing, signed by you and such officer of the Company as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or of compliance by such other party with,
any condition or provision of this agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party that are not set forth expressly in this
agreement.
12. GOVERNING LAW. The validity, interpretation, construction and
performance of this agreement shall be governed by the laws of the State of
Ohio, without giving effect to the principles of conflicts of law thereof.
13. VALIDITY. The invalidity or unenforceability of any provision of
this agreement shall not affect the validity or enforceability of any other
provision, which shall remain in full force and effect.
If this letter correctly sets forth our agreement on the subject matter hereof,
please so confirm by signing and returning the enclosed copy.
Very truly yours,
AMCAST INDUSTRIAL CORPORATION
By: /s/ Byron O. Pond
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Byron O. Pond
Its: Chairman of the Board and CEO
Confirmed and Agreed to:
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/s/ Joseph R. Grewe
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Joseph R. Grewe
Date: April 1, 2002